Interpretation of the word “Partnership” for the purpose of CA/CS/CWA Act

The Acts governing the three professional Institutes define in Section 2 members who are deemed
to be in practice. In all the three Acts, there is a provision for a member to be in practice when he is in
partnership with certain others. In the case of Chartered Accountants and Cost & Works Accountants, such
persons must be member of the same Institute, while in the case of Company Secretaries, it is provided
that the partnership could also be with members of such other recognised professions as may be
prescribed.
2 At the time of enactment of the three Acts governing the professional Institutes, only one form of
partnership existed in India, namely Partnerships under Indian Partnership Act, 1932. Subsequently,
Parliament has enacted the Limited Liability Partnerships Act, 2008. Though Limited Liability Partnerships
are bodies corporate under Section 3(i) of the LLP Act, the fact that LLPs are basically partnerships may be
seen from the definition in Section 2(i) (n) :‐
“ Limited Liability Partnerships means a partnership formed and registered under this Act.
Section 2(i)(q) defines a partner as “any person who becomes a partner in the limited liability
partnership in accordance with the Limited Liability Partnership Agreement”
It is thus clear that a Limited Liability Partnership is also a partnership and its members are also
partners.
3. The matter of permitting member of ICAI, ICWAI and I ICSI was been examined in this Ministry.
Acts governing these professionals were passed at a time when limited liability partnership did not exist. It
is also clear from the definitions in the Limited Liability Partnership Act that such entities are also
partnerships and their members are also partners. In the context of Section 2 of the Acts governing the
professional Institutes, this interpretation is also not repugnant to the context. Accordingly, it is clarified
that the words “partnership” wherever occurring in the Chartered Accountants Act, 1949, the Cost and
Works Accountants Act, 1959 and the Company Secretaries Act, 1980 shall mutatis mutandis be construed
as including those Limited Liability Partnerships where all the other partners are natural
persons(individuals). The word “partner” shall also be construed accordingly. This clarification shall apply
only to these three Acts and not to any other enactment where the word “partnership’ occurs.
4. This issues with the approval of Competent Authority.